New York Markets After Hours

Mitsubishi UFJ unit mulls selling Kim Eng stake

AtsukoFukase

TOKYO (MarketWatch) -- Mitsubishi UFJ Securities Holdings Co. is considering selling off its 29.9% stake in Singapore brokerage Kim Eng Holdings Ltd., after Malaysia's top financial group said it would seek full ownership of the unit, a person familiar with the matter said Sunday.

The contemplated sale comes as Mitsubishi UFJ Morgan Stanley Securities Co., which was launched in May 2010, posted a loss of roughly about Y80 billion on its bond trading. If the Japanese brokerage sells its stake in Kim Eng, which is worth tens of billions of yen, that would help cover the trading loss.

It's unclear if the contemplated sale is related to the loss.

Mitsubishi UFJ Financial Group Inc. (MTU, 8306.TO) was weighing the sale before the loss for other reasons. The brokerage unit of MUFG has been discussing whether to sell or keep its stake in Kim Eng since Malaysia's top financial services group, Maylayan Banking Berhad (1155.KU), or Maybank, announced in January that it plans to buy a 44% stake in the brokerage. Maybank said at the time it also wanted to buy the remaining outstanding shares in a tender offer.

MUFG isn't a majority shareholder, and Maybank and MUFG's rival, Mizuho Financial Group Inc. (8411.TO), have a business tie-up, another person familiar with the matter said.

If Maybank acquires full ownership of Kim Eng, it would be worth roughly Y120 billion. In November 2007, Mitsubishi UFJ Securities entered into an operating alliance with Kim Eng and took a 4% stake in the Singapore brokerage. Since then, the Tokyo brokerage has boosted its stake in Kim Eng, which has a big presence in the secondary business in South East Asian markets.

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